Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Utahtaxhelp Org

2012 Ez Tax FormFree 1040nr SoftwareEz401040 Ez 2011 FormIrs1040ezFree State Tax Fileing2010 1040How Do I Amend My Taxes1040nr-ezAmended Tax Returns More:label_amended_20tax_20returns More:taxesFull Time Student Filing TaxesTurbo Tax 20132011 Form 1040How To File An Amended Tax Return For 2012Form 1040 EzHow To Make An Amendment To TaxesIncome Tax Forms 1040Filing A Tax Amendment OnlineEasy 1040Where Can I File State And Federal Taxes For FreeMilitary Tax QuestionsTurbotax 2010 OnlineHow To Amend A Tax ReturnPrior TaxHow To File For 2010 TaxesE File 2012 Taxes FreeFederal Income Tax Extension1040x Instructions 2012Www State Tax FormsTax Form 1040x InstructionsFile My 1040x ElectronicallyFiling State Taxes Free OnlineFile 2012 Taxes Online For FreeNeed To File My 2012 TaxesAmend Your Tax ReturnFiling Amended ReturnsHow To Fill 1040nrMilitary Tax Calculator1040 Tax Forms PrintableFree Tax Return

Utahtaxhelp Org

Utahtaxhelp org Index A Assistance (see Tax help) F Free tax services, How To Get Tax Help H Help (see Tax help) M More information (see Tax help) P Publications (see Tax help) T Tax help, How To Get Tax Help Taxpayer Advocate, Taxpayer Advocate Service. Utahtaxhelp org TTY/TDD information, How To Get Tax Help Prev  Up     Home   More Online Publications
Español

Department of Transportation (DOT)

The Department of Transportation is responsible for planning and coordinating federal transportation projects. It also sets safety regulations for all major modes of transportation.

The Utahtaxhelp Org

Utahtaxhelp org 6. Utahtaxhelp org   How To Report Table of Contents Where To ReportGifts. Utahtaxhelp org Statutory employees. Utahtaxhelp org Vehicle Provided by Your Employer ReimbursementsAccountable Plans Nonaccountable Plans Rules for Independent Contractors and Clients How To Use Per Diem Rate TablesThe Two Substantiation Methods Transition Rules Completing Forms 2106 and 2106-EZInformation on use of cars. Utahtaxhelp org Standard mileage rate. Utahtaxhelp org Actual expenses. Utahtaxhelp org Car rentals. Utahtaxhelp org Hours of service limits. Utahtaxhelp org Allocating your reimbursement. Utahtaxhelp org 1. Utahtaxhelp org Limit on meals and entertainment. Utahtaxhelp org 2. Utahtaxhelp org Limit on miscellaneous itemized deductions. Utahtaxhelp org 3. Utahtaxhelp org Limit on total itemized deductions. Utahtaxhelp org Special Rules This chapter explains where and how to report the expenses discussed in this publication. Utahtaxhelp org It discusses reimbursements and how to treat them under accountable and nonaccountable plans. Utahtaxhelp org It also explains rules for independent contractors and clients, fee-basis officials, certain performing artists, Armed Forces reservists, and certain disabled employees. Utahtaxhelp org The chapter ends with illustrations of how to report travel, entertainment, gift, and car expenses on Forms 2106 and 2106-EZ. Utahtaxhelp org Where To Report This section provides general information on where to report the expenses discussed in this publication. Utahtaxhelp org Self-employed. Utahtaxhelp org   You must report your income and expenses on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) if you are a sole proprietor, or on Schedule F (Form 1040) if you are a farmer. Utahtaxhelp org You do not use Form 2106 or 2106-EZ. Utahtaxhelp org    If you claim car or truck expenses, you must provide certain information on the use of your vehicle. Utahtaxhelp org You provide this information on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Form 4562. Utahtaxhelp org   If you file Schedule C (Form 1040): Report your travel expenses, except meals, on line 24a, Report your deductible meals (actual cost or standard meal allowance) and entertainment on line 24b, Report your gift expenses and transportation expenses, other than car expenses, on line 27a, and Report your car expenses on line 9. Utahtaxhelp org Complete Part IV of the form unless you have to file Form 4562 for depreciation or amortization. Utahtaxhelp org   If you file Schedule C-EZ (Form 1040), report the total of all business expenses on line 2. Utahtaxhelp org You can only include 50% of your meals and entertainment in that total. Utahtaxhelp org If you include car expenses, you must also complete Part III of the form. Utahtaxhelp org    If you file Schedule F (Form 1040): Report your car expenses on line 10. Utahtaxhelp org Attach Form 4562 and provide information on the use of your car in Part V of Form 4562. Utahtaxhelp org Report all other business expenses discussed in this publication on line 32. Utahtaxhelp org You can only include 50% of your meals and entertainment on that line. Utahtaxhelp org See your form instructions for more information on how to complete your tax return. Utahtaxhelp org Both self-employed and an employee. Utahtaxhelp org   If you are both self-employed and an employee, you must keep separate records for each business activity. Utahtaxhelp org Report your business expenses for self-employment on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040), as discussed earlier. Utahtaxhelp org Report your business expenses for your work as an employee on Form 2106 or 2106-EZ, as discussed next. Utahtaxhelp org Employees. Utahtaxhelp org    If you are an employee, you generally must complete Form 2106 to deduct your travel, transportation, and entertainment expenses. Utahtaxhelp org However, you can use the shorter Form 2106-EZ instead of Form 2106 if you meet all of the following conditions. Utahtaxhelp org You are an employee deducting expenses attributable to your job. Utahtaxhelp org You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). Utahtaxhelp org If you claim car expenses, you use the standard mileage rate. Utahtaxhelp org   For more information on how to report your expenses on Forms 2106 and 2106-EZ, see Completing Forms 2106 and 2106-EZ , later. Utahtaxhelp org Gifts. Utahtaxhelp org   If you did not receive any reimbursements (or the reimbursements were all included in box 1 of your Form W-2), the only business expense you are claiming is for gifts, and the Special Rules discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. Utahtaxhelp org Instead, claim the amount of your deductible gifts directly on line 21 of Schedule A (Form 1040). Utahtaxhelp org Statutory employees. Utahtaxhelp org    If you received a Form W-2 and the “Statutory employee” box in box 13 was checked, report your income and expenses related to that income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040). Utahtaxhelp org Do not complete Form 2106 or 2106-EZ. Utahtaxhelp org   Statutory employees include full-time life insurance salespersons, certain agent or commission drivers, traveling salespersons, and certain homeworkers. Utahtaxhelp org If you are entitled to a reimbursement from your employer but you do not claim it, you cannot claim a deduction for the expenses to which that unclaimed reimbursement applies. Utahtaxhelp org Reimbursement for personal expenses. Utahtaxhelp org    If your employer reimburses you for nondeductible personal expenses, such as for vacation trips, your employer must report the reimbursement as wage income in box 1 of your Form W-2. Utahtaxhelp org You cannot deduct personal expenses. Utahtaxhelp org Income-producing property. Utahtaxhelp org   If you have travel or transportation expenses related to income-producing property, report your deductible expenses on the form appropriate for that activity. Utahtaxhelp org   For example, if you have rental real estate income and expenses, report your expenses on Schedule E (Form 1040), Supplemental Income and Loss. Utahtaxhelp org See Publication 527, Residential Rental Property, for more information on the rental of real estate. Utahtaxhelp org If you have deductible investment-related transportation expenses, report them on Schedule A (Form 1040), line 23. Utahtaxhelp org Vehicle Provided by Your Employer If your employer provides you with a car, you may be able to deduct the actual expenses of operating that car for business purposes. Utahtaxhelp org The amount you can deduct depends on the amount that your employer included in your income and the business and personal miles you drove during the year. Utahtaxhelp org You cannot use the standard mileage rate. Utahtaxhelp org Value reported on Form W-2. Utahtaxhelp org   Your employer can figure and report either the actual value of your personal use of the car or the value of the car as if you used it only for personal purposes (100% income inclusion). Utahtaxhelp org Your employer must separately state the amount if 100% of the annual lease value was included in your income. Utahtaxhelp org If you are unsure of the amount included on your Form W-2, ask your employer. Utahtaxhelp org Full value included in your income. Utahtaxhelp org   You can deduct the value of the business use of an employer-provided car if your employer reported 100% of the value of the car in your income. Utahtaxhelp org On your 2013 Form W-2, the amount of the value will be included in box 1, Wages, tips, other compensation, and box 14. Utahtaxhelp org    To claim your expenses, complete Form 2106, Part II, Sections A and C. Utahtaxhelp org Enter your actual expenses on line 23 of Section C and include the entire value of the employer-provided car on line 25. Utahtaxhelp org Complete the rest of the form. Utahtaxhelp org Less than full value included in your income. Utahtaxhelp org   If less than the full annual lease value of the car was included on your Form W-2, this means that your Form W-2 only includes the value of your personal use of the car. Utahtaxhelp org Do not enter this value on your Form 2106 because it is not deductible. Utahtaxhelp org   If you paid any actual costs (that your employer did not provide or reimburse you for) to operate the car, you can deduct the business portion of those costs. Utahtaxhelp org Examples of costs that you may have are gas, oil, and repairs. Utahtaxhelp org Complete Form 2106, Part II, Sections A and C. Utahtaxhelp org Enter your actual costs on line 23 of Section C and leave line 25 blank. Utahtaxhelp org Complete the rest of the form. Utahtaxhelp org Reimbursements This section explains what to do when you receive an advance or are reimbursed for any of the employee business expenses discussed in this publication. Utahtaxhelp org If you received an advance, allowance, or reimbursement for your expenses, how you report this amount and your expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan. Utahtaxhelp org This section explains the two types of plans, how per diem and car allowances simplify proving the amount of your expenses, and the tax treatment of your reimbursements and expenses. Utahtaxhelp org It also covers rules for independent contractors. Utahtaxhelp org No reimbursement. Utahtaxhelp org   You are not reimbursed or given an allowance for your expenses if you are paid a salary or commission with the understanding that you will pay your own expenses. Utahtaxhelp org In this situation, you have no reimbursement or allowance arrangement, and you do not have to read this section on reimbursements. Utahtaxhelp org Instead, see Completing Forms 2106 and 2106-EZ , later, for information on completing your tax return. Utahtaxhelp org Reimbursement, allowance, or advance. Utahtaxhelp org   A reimbursement or other expense allowance arrangement is a system or plan that an employer uses to pay, substantiate, and recover the expenses, advances, reimbursements, and amounts charged to the employer for employee business expenses. Utahtaxhelp org Arrangements include per diem and car allowances. Utahtaxhelp org    A per diem allowance is a fixed amount of daily reimbursement your employer gives you for your lodging, meals, and incidental expenses when you are away from home on business. Utahtaxhelp org (The term “ incidental expenses ” is defined in chapter 1 under Standard Meal Allowance. Utahtaxhelp org ) A car allowance is an amount your employer gives you for the business use of your car. Utahtaxhelp org   Your employer should tell you what method of reimbursement is used and what records you must provide. Utahtaxhelp org Employers. Utahtaxhelp org   If you are an employer and you reimburse employee business expenses, how you treat this reimbursement on your employee's Form W-2 depends in part on whether you have an accountable plan. Utahtaxhelp org Reimbursements treated as paid under an accountable plan, as explained next, are not reported as pay. Utahtaxhelp org Reimbursements treated as paid under nonaccountable plans , as explained later, are reported as pay. Utahtaxhelp org See Publication 15 (Circular E), Employer's Tax Guide, for information on employee pay. Utahtaxhelp org Accountable Plans To be an accountable plan, your employer's reimbursement or allowance arrangement must include all of the following rules: Your expenses must have a business connection — that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. Utahtaxhelp org You must adequately account to your employer for these expenses within a reasonable period of time. Utahtaxhelp org You must return any excess reimbursement or allowance within a reasonable period of time. Utahtaxhelp org “ Adequate accounting ” and “ returning excess reimbursements ” are discussed later. Utahtaxhelp org An excess reimbursement or allowance is any amount you are paid that is more than the business-related expenses that you adequately accounted for to your employer. Utahtaxhelp org Reasonable period of time. Utahtaxhelp org   The definition of reasonable period of time depends on the facts and circumstances of your situation. Utahtaxhelp org However, regardless of the facts and circumstances of your situation, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time. Utahtaxhelp org You receive an advance within 30 days of the time you have an expense. Utahtaxhelp org You adequately account for your expenses within 60 days after they were paid or incurred. Utahtaxhelp org You return any excess reimbursement within 120 days after the expense was paid or incurred. Utahtaxhelp org You are given a periodic statement (at least quarterly) that asks you to either return or adequately account for outstanding advances and you comply within 120 days of the statement. Utahtaxhelp org Employee meets accountable plan rules. Utahtaxhelp org   If you meet the three rules for accountable plans, your employer should not include any reimbursements in your income in box 1 of your Form W-2. Utahtaxhelp org If your expenses equal your reimbursements, you do not complete Form 2106. Utahtaxhelp org You have no deduction since your expenses and reimbursement are equal. Utahtaxhelp org    If your employer included reimbursements in box 1 of your Form W-2 and you meet all the rules for accountable plans, ask your employer for a corrected Form W-2. Utahtaxhelp org Accountable plan rules not met. Utahtaxhelp org   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules. Utahtaxhelp org All reimbursements that fail to meet all three rules for accountable plans are generally treated as having been reimbursed under a nonaccountable plan (discussed later). Utahtaxhelp org Failure to return excess reimbursements. Utahtaxhelp org   If you are reimbursed under an accountable plan, but you fail to return, within a reasonable time, any amounts in excess of the substantiated amounts, the amounts paid in excess of the substantiated expenses are treated as paid under a nonaccountable plan. Utahtaxhelp org See Reasonable period of time , earlier, and Returning Excess Reimbursements , later. Utahtaxhelp org Reimbursement of nondeductible expenses. Utahtaxhelp org   You may be reimbursed under your employer's accountable plan for expenses related to that employer's business, some of which are deductible as employee business expenses and some of which are not deductible. Utahtaxhelp org The reimbursements you receive for the nondeductible expenses do not meet rule (1) for accountable plans, and they are treated as paid under a nonaccountable plan. Utahtaxhelp org Example. Utahtaxhelp org Your employer's plan reimburses you for travel expenses while away from home on business and also for meals when you work late at the office, even though you are not away from home. Utahtaxhelp org The part of the arrangement that reimburses you for the nondeductible meals when you work late at the office is treated as paid under a nonaccountable plan. Utahtaxhelp org The employer makes the decision whether to reimburse employees under an accountable plan or a nonaccountable plan. Utahtaxhelp org If you are an employee who receives payments under a nonaccountable plan, you cannot convert these amounts to payments under an accountable plan by voluntarily accounting to your employer for the expenses and voluntarily returning excess reimbursements to the employer. Utahtaxhelp org Adequate Accounting One of the rules for an accountable plan is that you must adequately account to your employer for your expenses. Utahtaxhelp org You adequately account by giving your employer a statement of expense, an account book, a diary, or a similar record in which you entered each expense at or near the time you had it, along with documentary evidence (such as receipts) of your travel, mileage, and other employee business expenses. Utahtaxhelp org (See Table 5-1 in chapter 5 for details you need to enter in your record and documents you need to prove certain expenses. Utahtaxhelp org ) A per diem or car allowance satisfies the adequate accounting requirement under certain conditions. Utahtaxhelp org See Per Diem and Car Allowances , later. Utahtaxhelp org You must account for all amounts you received from your employer during the year as advances, reimbursements, or allowances. Utahtaxhelp org This includes amounts you charged to your employer by credit card or other method. Utahtaxhelp org You must give your employer the same type of records and supporting information that you would have to give to the IRS if the IRS questioned a deduction on your return. Utahtaxhelp org You must pay back the amount of any reimbursement or other expense allowance for which you do not adequately account or that is more than the amount for which you accounted. Utahtaxhelp org Per Diem and Car Allowances If your employer reimburses you for your expenses using a per diem or a car allowance, you can generally use the allowance as proof for the amount of your expenses. Utahtaxhelp org A per diem or car allowance satisfies the adequate accounting requirements for the amount of your expenses only if all the following conditions apply. Utahtaxhelp org Your employer reasonably limits payments of your expenses to those that are ordinary and necessary in the conduct of the trade or business. Utahtaxhelp org The allowance is similar in form to and not more than the federal rate (defined later). Utahtaxhelp org You prove the time (dates), place, and business purpose of your expenses to your employer (as explained in Table 5-1 ) within a reasonable period of time. Utahtaxhelp org You are not related to your employer (as defined next). Utahtaxhelp org If you are related to your employer, you must be able to prove your expenses to the IRS even if you have already adequately accounted to your employer and returned any excess reimbursement. Utahtaxhelp org If the IRS finds that an employer's travel allowance practices are not based on reasonably accurate estimates of travel costs (including recognition of cost differences in different areas for per diem amounts), you will not be considered to have accounted to your employer. Utahtaxhelp org In this case, you must be able to prove your expenses to the IRS. Utahtaxhelp org Related to employer. Utahtaxhelp org   You are related to your employer if: Your employer is your brother or sister, half brother or half sister, spouse, ancestor, or lineal descendant, Your employer is a corporation in which you own, directly or indirectly, more than 10% in value of the outstanding stock, or Certain relationships (such as grantor, fiduciary, or beneficiary) exist between you, a trust, and your employer. Utahtaxhelp org You may be considered to indirectly own stock, for purposes of (2), if you have an interest in a corporation, partnership, estate, or trust that owns the stock or if a member of your family or your partner owns the stock. Utahtaxhelp org The federal rate. Utahtaxhelp org   The federal rate can be figured using any one of the following methods. Utahtaxhelp org For per diem amounts: The regular federal per diem rate. Utahtaxhelp org The standard meal allowance. Utahtaxhelp org The high-low rate. Utahtaxhelp org For car expenses: The standard mileage rate. Utahtaxhelp org A fixed and variable rate (FAVR). Utahtaxhelp org    For per diem amounts, use the rate in effect for the area where you stop for sleep or rest. Utahtaxhelp org Regular federal per diem rate. Utahtaxhelp org   The regular federal per diem rate is the highest amount that the federal government will pay to its employees for lodging, meals, and incidental expenses (or meals and incidental expenses only) while they are traveling away from home in a particular area. Utahtaxhelp org The rates are different for different locations. Utahtaxhelp org Your employer should have these rates available. Utahtaxhelp org You can also find federal per diem rates at www. Utahtaxhelp org gsa. Utahtaxhelp org gov/perdiem. Utahtaxhelp org The standard meal allowance. Utahtaxhelp org   The standard meal allowance (discussed in chapter 1) is the federal rate for meals and incidental expenses (M&IE). Utahtaxhelp org The rate for most small localities in the United States is $46 a day. Utahtaxhelp org Most major cities and many other localities qualify for higher rates. Utahtaxhelp org You can find this information on the Internet at www. Utahtaxhelp org gsa. Utahtaxhelp org gov/perdiem. Utahtaxhelp org   You receive an allowance only for meals and incidental expenses when your employer does one of the following. Utahtaxhelp org Provides you with lodging (furnishes it in kind). Utahtaxhelp org Reimburses you, based on your receipts, for the actual cost of your lodging. Utahtaxhelp org Pays the hotel, motel, etc. Utahtaxhelp org , directly for your lodging. Utahtaxhelp org Does not have a reasonable belief that you had (or will have) lodging expenses, such as when you stay with friends or relatives or sleep in the cab of your truck. Utahtaxhelp org Figures the allowance on a basis similar to that used in computing your compensation, such as number of hours worked or miles traveled. Utahtaxhelp org High-low rate. Utahtaxhelp org   This is a simplified method of computing the federal per diem rate for travel within the continental United States. Utahtaxhelp org It eliminates the need to keep a current list of the per diem rates for each city. Utahtaxhelp org   Under the high-low method, the per diem amount for travel during January through September of 2013 is $242 (including $65 for M&IE) for certain high-cost locations. Utahtaxhelp org All other areas have a per diem amount of $163 (including $52 for M&IE). Utahtaxhelp org For more information, see Notice 2012-63, which can be found on the Internet at www. Utahtaxhelp org irs. Utahtaxhelp org gov/irb/2012-42_IRB/ar12. Utahtaxhelp org html. Utahtaxhelp org    Effective October 1, 2013, the per diem rate for certain high-cost locations increased to $251 (including $65 for M&IE). Utahtaxhelp org The rate for all other locations increased to $170 (including $52 for M&IE). Utahtaxhelp org Employers who did not use the high-low method during the first 9 months of 2013 cannot begin to use it before 2014. Utahtaxhelp org For more information, see Notice 2013-65, which can be found on the Internet at www. Utahtaxhelp org irs. Utahtaxhelp org gov/pub/irs-drop/n-13–65. Utahtaxhelp org pdf and Revenue Procedure 2011-47 at www. Utahtaxhelp org irs. Utahtaxhelp org gov/irb/2011-42_IRB/ar12. Utahtaxhelp org html. Utahtaxhelp org Prorating the standard meal allowance on partial days of travel. Utahtaxhelp org   The standard meal allowance is for a full 24-hour day of travel. Utahtaxhelp org If you travel for part of a day, such as on the days you depart and return, you must prorate the full-day M&IE rate. Utahtaxhelp org This rule also applies if your employer uses the regular federal per diem rate or the high-low rate. Utahtaxhelp org   You can use either of the following methods to figure the federal M&IE for that day. Utahtaxhelp org Method 1: For the day you depart, add 3/4 of the standard meal allowance amount for that day. Utahtaxhelp org For the day you return, add 3/4 of the standard meal allowance amount for the preceding day. Utahtaxhelp org Method 2: Prorate the standard meal allowance using any method you consistently apply in accordance with reasonable business practice. Utahtaxhelp org For example, an employer can treat 2 full days of per diem (that includes M&IE) paid for travel away from home from 9 a. Utahtaxhelp org m. Utahtaxhelp org of one day to 5 p. Utahtaxhelp org m. Utahtaxhelp org of the next day as being no more than the federal rate. Utahtaxhelp org This is true even though a federal employee would be limited to a reimbursement of M&IE for only 1½ days of the federal M&IE rate. Utahtaxhelp org The standard mileage rate. Utahtaxhelp org   This is a set rate per mile that you can use to compute your deductible car expenses. Utahtaxhelp org For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. Utahtaxhelp org Fixed and variable rate (FAVR). Utahtaxhelp org   This is an allowance your employer may use to reimburse your car expenses. Utahtaxhelp org Under this method, your employer pays an allowance that includes a combination of payments covering fixed and variable costs, such as a cents-per-mile rate to cover your variable operating costs (such as gas, oil, etc. Utahtaxhelp org ) plus a flat amount to cover your fixed costs (such as depreciation (or lease payments), insurance, etc. Utahtaxhelp org ). Utahtaxhelp org If your employer chooses to use this method, your employer will request the necessary records from you. Utahtaxhelp org Reporting your expenses with a per diem or car allowance. Utahtaxhelp org   If your reimbursement is in the form of an allowance received under an accountable plan, the following facts affect your reporting. Utahtaxhelp org The federal rate. Utahtaxhelp org Whether the allowance or your actual expenses were more than the federal rate. Utahtaxhelp org The following discussions explain where to report your expenses depending upon how the amount of your allowance compares to the federal rate. Utahtaxhelp org Allowance less than or equal to the federal rate. Utahtaxhelp org   If your allowance is less than or equal to the federal rate, the allowance will not be included in box 1 of your Form W-2. Utahtaxhelp org You do not need to report the related expenses or the allowance on your return if your expenses are equal to or less than the allowance. Utahtaxhelp org   However, if your actual expenses are more than your allowance, you can complete Form 2106 and deduct the excess amount on Schedule A (Form 1040). Utahtaxhelp org If you are using actual expenses, you must be able to prove to the IRS the total amount of your expenses and reimbursements for the entire year. Utahtaxhelp org If you are using the standard meal allowance or the standard mileage rate, you do not have to prove that amount. Utahtaxhelp org Example 1. Utahtaxhelp org In April, Jeremy takes a 2-day business trip to Denver. Utahtaxhelp org The federal rate for Denver is $215 per day. Utahtaxhelp org As required by his employer's accountable plan, he accounts for the time (dates), place, and business purpose of the trip. Utahtaxhelp org His employer reimburses him $215 a day ($430 total) for living expenses. Utahtaxhelp org Jeremy's living expenses in Denver are not more than $215 a day. Utahtaxhelp org Jeremy's employer does not include any of the reimbursement on his Form W-2 and Jeremy does not deduct the expenses on his return. Utahtaxhelp org Example 2. Utahtaxhelp org In June, Matt takes a 2-day business trip to Boston. Utahtaxhelp org Matt's employer uses the high-low method to reimburse employees. Utahtaxhelp org Since Boston is a high-cost area, Matt is given an advance of $242 a day ($484 total) for his lodging, meals, and incidental expenses. Utahtaxhelp org Matt's actual expenses totaled $700. Utahtaxhelp org Since Matt's $700 of expenses are more than his $484 advance, he includes the excess expenses when he itemizes his deductions. Utahtaxhelp org Matt completes Form 2106 (showing all of his expenses and reimbursements). Utahtaxhelp org He must also allocate his reimbursement between his meals and other expenses as discussed later under Completing Forms 2106 and 2106-EZ . Utahtaxhelp org Example 3. Utahtaxhelp org Nicole drives 10,000 miles in 2013 for business. Utahtaxhelp org Under her employer's accountable plan, she accounts for the time (dates), place, and business purpose of each trip. Utahtaxhelp org Her employer pays her a mileage allowance of 40 cents a mile. Utahtaxhelp org Since Nicole's $5,650 expense computed under the standard mileage rate (10,000 miles x 56½ cents) is more than her $4,000 reimbursement (10,000 miles × 40 cents), she itemizes her deductions to claim the excess expense. Utahtaxhelp org Nicole completes Form 2106 (showing all her expenses and reimbursements) and enters $1,650 ($5,650 − $4,000) as an itemized deduction. Utahtaxhelp org Allowance more than the federal rate. Utahtaxhelp org   If your allowance is more than the federal rate, your employer must include the allowance amount up to the federal rate in box 12 of your Form W-2. Utahtaxhelp org This amount is not taxable. Utahtaxhelp org However, the excess allowance will be included in box 1 of your Form W-2. Utahtaxhelp org You must report this part of your allowance as if it were wage income. Utahtaxhelp org   If your actual expenses are less than or equal to the federal rate, you do not complete Form 2106 or claim any of your expenses on your return. Utahtaxhelp org   However, if your actual expenses are more than the federal rate, you can complete Form 2106 and deduct those excess expenses. Utahtaxhelp org You must report on Form 2106 your reimbursements up to the federal rate (as shown in box 12 of your Form W-2) and all your expenses. Utahtaxhelp org You should be able to prove these amounts to the IRS. Utahtaxhelp org Example 1. Utahtaxhelp org Laura lives and works in Austin. Utahtaxhelp org In July her employer sent her to Albuquerque for 4 days on business. Utahtaxhelp org Laura's employer paid the hotel directly for her lodging and reimbursed Laura $65 a day ($260 total) for meals and incidental expenses. Utahtaxhelp org Laura's actual meal expenses were not more than the federal rate for Albuquerque, which is $56 per day. Utahtaxhelp org Table 6-1. Utahtaxhelp org Reporting Travel, Entertainment, Gift, and Car Expenses and Reimbursements IF the type of reimbursement (or  other expense allowance)  arrangement is under: THEN the employer reports on Form W-2: AND the employee reports on  Form 2106: * An accountable plan with: Actual expense reimbursement: Adequate accounting made and excess returned. Utahtaxhelp org No amount. Utahtaxhelp org No amount. Utahtaxhelp org Actual expense reimbursement: Adequate accounting and return of excess both required but excess not returned. Utahtaxhelp org The excess amount as wages in box 1. Utahtaxhelp org No amount. Utahtaxhelp org Per diem or mileage allowance up to the federal rate: Adequate accounting made and excess returned. Utahtaxhelp org No amount. Utahtaxhelp org All expenses and reimbursements only if excess expenses are claimed. Utahtaxhelp org Otherwise, form is not filed. Utahtaxhelp org Per diem or mileage allowance up to the federal rate: Adequate accounting and return of excess both required but excess not returned. Utahtaxhelp org The excess amount as wages in box 1. Utahtaxhelp org The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Utahtaxhelp org No amount. Utahtaxhelp org Per diem or mileage allowance exceeds the federal rate: Adequate accounting up to the federal rate only and excess not returned. Utahtaxhelp org The excess amount as wages in box 1. Utahtaxhelp org The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Utahtaxhelp org All expenses (and reimbursements reported on Form W-2, box 12) only if expenses in excess of the federal rate are claimed. Utahtaxhelp org Otherwise, form is not filed. Utahtaxhelp org A nonaccountable plan with: Either adequate accounting or return of excess, or both, not required by plan. Utahtaxhelp org The entire amount as wages in box 1. Utahtaxhelp org All expenses. Utahtaxhelp org No reimbursement plan: The entire amount as wages in box 1. Utahtaxhelp org All expenses. Utahtaxhelp org * You may be able to use Form 2106-EZ. Utahtaxhelp org See Completing Forms 2106 and 2106-EZ . Utahtaxhelp org Her employer included the $36 that was more than the federal rate (($65 − $56) × 4) in box 1 of Laura's Form W-2. Utahtaxhelp org Her employer shows $224 ($56 a day × 4) in box 12 of her Form W-2. Utahtaxhelp org This amount is not included in Laura's income. Utahtaxhelp org Laura does not have to complete Form 2106; however, she must include the $36 in her gross income as wages (by reporting the total amount shown in box 1 of her Form W-2). Utahtaxhelp org Example 2. Utahtaxhelp org Joe also lives in Austin and works for the same employer as Laura. Utahtaxhelp org In May the employer sent Joe to San Diego for 4 days and paid the hotel directly for Joe's hotel bill. Utahtaxhelp org The employer reimbursed Joe $75 a day for his meals and incidental expenses. Utahtaxhelp org The federal rate for San Diego is $71 a day. Utahtaxhelp org Joe can prove that his actual meal expenses totaled $380. Utahtaxhelp org His employer's accountable plan will not pay more than $75 a day for travel to San Diego, so Joe does not give his employer the records that prove that he actually spent $380. Utahtaxhelp org However, he does account for the time, place, and business purpose of the trip. Utahtaxhelp org This is Joe's only business trip this year. Utahtaxhelp org Joe was reimbursed $300 ($75 × 4 days), which is $16 more than the federal rate of $284 ($71 × 4 days). Utahtaxhelp org The employer includes the $16 as income on Joe's Form W-2 in box 1. Utahtaxhelp org The employer also enters $284 in box 12 of Joe's Form W-2. Utahtaxhelp org Joe completes Form 2106 to figure his deductible expenses. Utahtaxhelp org He enters the total of his actual expenses for the year ($380) on Form 2106. Utahtaxhelp org He also enters the reimbursements that were not included in his income ($284). Utahtaxhelp org His total deductible expense, before the 50% limit, is $96. Utahtaxhelp org After he figures the 50% limit on his unreimbursed meals and entertainment, he will include the balance, $48, as an itemized deduction. Utahtaxhelp org Example 3. Utahtaxhelp org Debbie drives 10,000 miles in 2013 for business. Utahtaxhelp org Under her employer's accountable plan, she gets reimbursed 60 cents a mile, which is more than the standard mileage rate. Utahtaxhelp org Her total reimbursement is $6,000. Utahtaxhelp org Debbie's employer must include the reimbursement amount up to the standard mileage rate, $5,650 (10,000 × 56½ cents), in box 12 of her Form W-2. Utahtaxhelp org That amount is not taxable. Utahtaxhelp org Her employer must also include $350 ($6,000 − $5,650) in box 1 of her Form W-2. Utahtaxhelp org This is the reimbursement that is more than the standard mileage rate. Utahtaxhelp org If Debbie's expenses are equal to or less than the standard mileage rate, she would not complete Form 2106. Utahtaxhelp org If her expenses are more than the standard mileage rate, she would complete Form 2106 and report her total expenses and reimbursement (shown in box 12 of her Form W-2). Utahtaxhelp org She would then claim the excess expenses as an itemized deduction. Utahtaxhelp org Returning Excess Reimbursements Under an accountable plan, you are required to return any excess reimbursement or other expense allowances for your business expenses to the person paying the reimbursement or allowance. Utahtaxhelp org Excess reimbursement means any amount for which you did not adequately account within a reasonable period of time. Utahtaxhelp org For example, if you received a travel advance and you did not spend all the money on business-related expenses or you do not have proof of all your expenses, you have an excess reimbursement. Utahtaxhelp org “ Adequate accounting ” and “ reasonable period of time ” were discussed earlier in this chapter. Utahtaxhelp org Travel advance. Utahtaxhelp org   You receive a travel advance if your employer provides you with an expense allowance before you actually have the expense, and the allowance is reasonably expected to be no more than your expense. Utahtaxhelp org Under an accountable plan, you are required to adequately account to your employer for this advance and to return any excess within a reasonable period of time. Utahtaxhelp org   If you do not adequately account for or do not return any excess advance within a reasonable period of time, the amount you do not account for or return will be treated as having been paid under a nonaccountable plan (discussed later). Utahtaxhelp org Unproved amounts. Utahtaxhelp org   If you do not prove that you actually traveled on each day for which you received a per diem or car allowance (proving the elements described in Table 5-1 ), you must return this unproved amount of the travel advance within a reasonable period of time. Utahtaxhelp org If you do not do this, the unproved amount will be considered paid under a nonaccountable plan (discussed later). Utahtaxhelp org Per diem allowance more than federal rate. Utahtaxhelp org   If your employer's accountable plan pays you an allowance that is higher than the federal rate, you do not have to return the difference between the two rates for the period you can prove business-related travel expenses. Utahtaxhelp org However, the difference will be reported as wages on your Form W-2. Utahtaxhelp org This excess amount is considered paid under a nonaccountable plan (discussed later). Utahtaxhelp org Example. Utahtaxhelp org Your employer sends you on a 5-day business trip to Phoenix in March 2013 and gives you a $400 ($80 × 5 days) advance to cover your meals and incidental expenses. Utahtaxhelp org The federal per diem for meals and incidental expenses for Phoenix is $71. Utahtaxhelp org Your trip lasts only 3 days. Utahtaxhelp org Under your employer's accountable plan, you must return the $160 ($80 × 2 days) advance for the 2 days you did not travel. Utahtaxhelp org For the 3 days you did travel you do not have to return the $27 difference between the allowance you received and the federal rate for Phoenix (($80 − $71) × 3 days). Utahtaxhelp org However, the $27 will be reported on your Form W-2 as wages. Utahtaxhelp org Nonaccountable Plans A nonaccountable plan is a reimbursement or expense allowance arrangement that does not meet one or more of the three rules listed earlier under Accountable Plans. Utahtaxhelp org In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan: Excess reimbursements you fail to return to your employer, and Reimbursement of nondeductible expenses related to your employer's business. Utahtaxhelp org See Reimbursement of nondeductible expenses , earlier, under Accountable Plans. Utahtaxhelp org An arrangement that repays you for business expenses by reducing the amount reported as your wages, salary, or other pay will be treated as a nonaccountable plan. Utahtaxhelp org This is because you are entitled to receive the full amount of your pay whether or not you have any business expenses. Utahtaxhelp org If you are not sure if the reimbursement or expense allowance arrangement is an accountable or nonaccountable plan, ask your employer. Utahtaxhelp org Reporting your expenses under a nonaccountable plan. Utahtaxhelp org   Your employer will combine the amount of any reimbursement or other expense allowance paid to you under a nonaccountable plan with your wages, salary, or other pay. Utahtaxhelp org Your employer will report the total in box 1 of your Form W-2. Utahtaxhelp org    You must complete Form 2106 or 2106-EZ and itemize your deductions to deduct your expenses for travel, transportation, meals, or entertainment. Utahtaxhelp org Your meal and entertainment expenses will be subject to the 50% limit discussed in chapter 2. Utahtaxhelp org Also, your total expenses will be subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. Utahtaxhelp org Example 1. Utahtaxhelp org Kim's employer gives her $1,000 a month ($12,000 total for the year) for her business expenses. Utahtaxhelp org Kim does not have to provide any proof of her expenses to her employer, and Kim can keep any funds that she does not spend. Utahtaxhelp org Kim is being reimbursed under a nonaccountable plan. Utahtaxhelp org Her employer will include the $12,000 on Kim's Form W-2 as if it were wages. Utahtaxhelp org If Kim wants to deduct her business expenses, she must complete Form 2106 or 2106-EZ and itemize her deductions. Utahtaxhelp org Example 2. Utahtaxhelp org Kevin is paid $2,000 a month by his employer. Utahtaxhelp org On days that he travels away from home on business, his employer designates $50 a day of his salary as paid to reimburse his travel expenses. Utahtaxhelp org Because his employer would pay Kevin his monthly salary whether or not he was traveling away from home, the arrangement is a nonaccountable plan. Utahtaxhelp org No part of the $50 a day designated by his employer is treated as paid under an accountable plan. Utahtaxhelp org Rules for Independent Contractors and Clients This section provides rules for independent contractors who incur expenses on behalf of a client or customer. Utahtaxhelp org The rules cover the reporting and substantiation of certain expenses discussed in this publication, and they affect both independent contractors and their clients or customers. Utahtaxhelp org You are considered an independent contractor if you are self-employed and you perform services for a customer or client. Utahtaxhelp org Accounting to Your Client If you received a reimbursement or an allowance for travel, entertainment, or gift expenses that you incurred on behalf of a client, you should provide an adequate accounting of these expenses to your client. Utahtaxhelp org If you do not account to your client for these expenses, you must include any reimbursements or allowances in income. Utahtaxhelp org You must keep adequate records of these expenses whether or not you account to your client for these expenses. Utahtaxhelp org If you do not separately account for and seek reimbursement for meals and entertainment in connection with providing services for a client, you are subject to the 50% limit on those expenses. Utahtaxhelp org See 50% Limit in chapter 2. Utahtaxhelp org Adequate accounting. Utahtaxhelp org   As a self-employed person, you adequately account by reporting your actual expenses. Utahtaxhelp org You should follow the recordkeeping rules in chapter 5 . Utahtaxhelp org How to report. Utahtaxhelp org   For information on how to report expenses on your tax return, see Self-employed at the beginning of this chapter. Utahtaxhelp org Required Records for Clients or Customers If you are a client or customer, you generally do not have to keep records to prove the reimbursements or allowances you give, in the course of your business, to an independent contractor for travel or gift expenses incurred on your behalf. Utahtaxhelp org However, you must keep records if: You reimburse the contractor for entertainment expenses incurred on your behalf, and The contractor adequately accounts to you for these expenses. Utahtaxhelp org Contractor adequately accounts. Utahtaxhelp org   If the contractor adequately accounts to you for entertainment expenses, you (the client or customer) must keep records documenting each element of the expense, as explained in chapter 5 . Utahtaxhelp org Use your records as proof for a deduction on your tax return. Utahtaxhelp org If entertainment expenses are accounted for separately, you are subject to the 50% limit on entertainment. Utahtaxhelp org If the contractor adequately accounts to you for reimbursed amounts, you do not have to report the amounts on an information return. Utahtaxhelp org Contractor does not adequately account. Utahtaxhelp org    If the contractor does not adequately account to you for allowances or reimbursements of entertainment expenses, you do not have to keep records of these items. Utahtaxhelp org You are not subject to the 50% limit on entertainment in this case. Utahtaxhelp org You can deduct the reimbursements or allowances as payment for services if they are ordinary and necessary business expenses. Utahtaxhelp org However, you must file Form 1099-MISC to report amounts paid to the independent contractor if the total of the reimbursements and any other fees is $600 or more during the calendar year. Utahtaxhelp org How To Use Per Diem Rate Tables This section contains information about the per diem rate substantiation methods available and the choice of rates you must make for the last 3 months of the year. Utahtaxhelp org The Two Substantiation Methods High-low method. Utahtaxhelp org   IRS notices list the localities that are treated under the high-low substantiation method as high-cost localities for all or part of the year. Utahtaxhelp org Notice 2012–63, available at www. Utahtaxhelp org irs. Utahtaxhelp org gov/irb/2012–42_IRB/ar12. Utahtaxhelp org html, lists the localities that are eligible for $242 ($65 meals and incidental expenses (M&IE)) per diem, effective October 1, 2012. Utahtaxhelp org For travel on or after October 1, 2012, all other localities within CONUS are eligible for $163 ($52 M&IE) per diem under the high-low method. Utahtaxhelp org   Notice 2013–65, available at www. Utahtaxhelp org irs. Utahtaxhelp org gov/pub/irs-drop/n-13–65. Utahtaxhelp org pdf, lists the localities that are eligible for $251 ($65 M&IE) per diem, effective October 1, 2013. Utahtaxhelp org For travel on or after October 1, 2013, the per diem for all other localities increased to $170 ($52 M&IE). Utahtaxhelp org Regular federal per diem rate method. Utahtaxhelp org   Regular federal per diem rates are published by the General Services Administration (GSA). Utahtaxhelp org Both tables include the separate rate for meals and incidental expenses (M&IE) for each locality. Utahtaxhelp org The rates listed for FY2013 at www. Utahtaxhelp org gsa. Utahtaxhelp org gov/perdiem are effective October 1, 2012 and those listed for FY2014 are effective October 1, 2013. Utahtaxhelp org The standard rate for all locations within CONUS not specifically listed for FY2013 is $123 ($77 for lodging and $46 for M&IE). Utahtaxhelp org For FY2014, this rate increased to $129 ($83 for lodging and $46 for M&IE). Utahtaxhelp org Transition Rules The transition period covers the last 3 months of the calendar year, from the time that new rates are effective (generally October 1) through December 31. Utahtaxhelp org During this period, you generally may change to the new rates or finish out the year with the rates you had been using. Utahtaxhelp org High-low method. Utahtaxhelp org   If you use the high-low substantiation method, when new rates become effective (generally October 1) you can either continue with the rates you used for the first part of the year or change to the new rates. Utahtaxhelp org However, you must continue using the high-low method for the rest of the calendar year (through December 31). Utahtaxhelp org If you are an employer, you must use the same rates for all employees reimbursed under the high-low method during that calendar year. Utahtaxhelp org   The new rates and localities for the high-low method are included each year in a notice that is generally published in mid-to-late-September. Utahtaxhelp org You can find the notice in the weekly Internal Revenue Bulletin (IRB) on the Internet at www. Utahtaxhelp org irs. Utahtaxhelp org gov/irb. Utahtaxhelp org Federal per diem rate method. Utahtaxhelp org   New CONUS per diem rates become effective on October 1 of each year and remain in effect through September 30 of the following year. Utahtaxhelp org Employees being reimbursed under the per diem rate method during the first 9 months of a year (January 1–September 30) must continue under the same method through the end of that calendar year (December 31). Utahtaxhelp org However, for travel by these employees from October 1 through December 31, you can choose to continue using the same per diem rates or use the new rates. Utahtaxhelp org   The new federal CONUS per diem rates are published each year, generally early in September, on the Internet. Utahtaxhelp org Go to www. Utahtaxhelp org gsa. Utahtaxhelp org gov/perdiem. Utahtaxhelp org Per diem rates for localities listed for FY2014 may change at any time. Utahtaxhelp org To be sure you have the most current rate, check www. Utahtaxhelp org gsa. Utahtaxhelp org gov/perdiem. Utahtaxhelp org Completing Forms 2106 and 2106-EZ This section briefly describes how employees complete Forms 2106 and 2106-EZ. Utahtaxhelp org Table 6-1 explains what the employer reports on Form W-2 and what the employee reports on Form 2106. Utahtaxhelp org The instructions for the forms have more information on completing them. Utahtaxhelp org If you are self-employed, do not file Form 2106 or 2106-EZ. Utahtaxhelp org Report your expenses on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040). Utahtaxhelp org See the instructions for the form that you must file. Utahtaxhelp org Form 2106-EZ. Utahtaxhelp org   You may be able to use the shorter Form 2106-EZ to claim your employee business expenses. Utahtaxhelp org You can use this form if you meet all the following conditions. Utahtaxhelp org You are an employee deducting ordinary and necessary expenses attributable to your job. Utahtaxhelp org You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). Utahtaxhelp org If you are claiming car expenses, you are using the standard mileage rate. Utahtaxhelp org Car expenses. Utahtaxhelp org   If you used a car to perform your job as an employee, you may be able to deduct certain car expenses. Utahtaxhelp org These are generally figured on Form 2106, Part II, and then claimed on Form 2106, Part I, line 1, Column A. Utahtaxhelp org Car expenses using the standard mileage rate can also be figured on Form 2106-EZ by completing Part II and Part I, line 1. Utahtaxhelp org Information on use of cars. Utahtaxhelp org   If you claim any deduction for the business use of a car, you must answer certain questions and provide information about the use of the car. Utahtaxhelp org The information relates to the following items. Utahtaxhelp org Date placed in service. Utahtaxhelp org Mileage (total, business, commuting, and other personal mileage). Utahtaxhelp org Percentage of business use. Utahtaxhelp org After-work use. Utahtaxhelp org Use of other vehicles. Utahtaxhelp org Whether you have evidence to support the deduction. Utahtaxhelp org Whether or not the evidence is written. Utahtaxhelp org Employees must complete Form 2106, Part II, Section A, or Form 2106-EZ, Part II, to provide this information. Utahtaxhelp org Standard mileage rate. Utahtaxhelp org   If you claim a deduction based on the standard mileage rate instead of your actual expenses, you must complete Form 2106, Part II, Section B. Utahtaxhelp org The amount on line 22 (Section B) is carried to Form 2106, Part I, line 1. Utahtaxhelp org In addition, on Part 1, line 2, you can deduct parking fees and tolls that apply to the business use of the car. Utahtaxhelp org If you file Form 2106-EZ, complete Part I, line 1, for the standard mileage rate and line 2 for parking fees and tolls. Utahtaxhelp org See Standard Mileage Rate in chapter 4 for information on using this rate. Utahtaxhelp org Actual expenses. Utahtaxhelp org   If you claim a deduction based on actual car expenses, you cannot use Form 2106-EZ. Utahtaxhelp org You must complete Form 2106, Part II, Section C. Utahtaxhelp org In addition, unless you lease your car, you must complete Section D to show your depreciation deduction and any section 179 deduction you claim. Utahtaxhelp org   If you are still using a car that is fully depreciated, continue to complete Section C. Utahtaxhelp org Since you have no depreciation deduction, enter zero on line 28. Utahtaxhelp org In this case, do not complete Section D. Utahtaxhelp org Car rentals. Utahtaxhelp org   If you claim car rental expenses on Form 2106, line 24a, you may have to reduce that expense by an inclusion amount as described in chapter 4. Utahtaxhelp org If so, you can show your car expenses and any inclusion amount as follows. Utahtaxhelp org Compute the inclusion amount without taking into account your business use percentage for the tax year. Utahtaxhelp org Report the inclusion amount from (1) on Form 2106, Part II, line 24b. Utahtaxhelp org Report on line 24c the net amount of car rental expenses (total car rental expenses minus the inclusion amount computed in (1)). Utahtaxhelp org The net amount of car rental expenses will be adjusted on Form 2106, Part II, line 27, to reflect the percentage of business use for the tax year. Utahtaxhelp org Transportation expenses. Utahtaxhelp org   Show your transportation expenses that did not involve overnight travel on Form 2106, line 2, Column A, or on Form 2106-EZ, Part I, line 2. Utahtaxhelp org Also include on this line business expenses you have for parking fees and tolls. Utahtaxhelp org Do not include expenses of operating your car or expenses of commuting between your home and work. Utahtaxhelp org Employee business expenses other than meals and entertainment. Utahtaxhelp org   Show your other employee business expenses on Form 2106, lines 3 and 4, Column A, or Form 2106-EZ, lines 3 and 4. Utahtaxhelp org Do not include expenses for meals and entertainment on those lines. Utahtaxhelp org Line 4 is for expenses such as gifts, educational expenses (tuition and books), office-in-the-home expenses, and trade and professional publications. Utahtaxhelp org    If line 4 expenses are the only ones you are claiming, you received no reimbursements (or the reimbursements were all included in box 1 of your Form W-2), and the Special Rules discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. Utahtaxhelp org Claim these amounts directly on Schedule A (Form 1040), line 21. Utahtaxhelp org List the type and amount of each expense on the dotted lines and include the total on line 21. Utahtaxhelp org Meal and entertainment expenses. Utahtaxhelp org   Show the full amount of your expenses for business-related meals and entertainment on Form 2106, line 5, Column B. Utahtaxhelp org Include meals while away from your tax home overnight and other business meals and entertainment. Utahtaxhelp org Enter 50% of the line 8, Column B, meal and entertainment expenses on line 9, Column B. Utahtaxhelp org   If you file Form 2106-EZ, enter the full amount of your meals and entertainment on the line to the left of line 5 and multiply the total by 50%. Utahtaxhelp org Enter the result on line 5. Utahtaxhelp org Hours of service limits. Utahtaxhelp org   If you are subject to the Department of Transportation's “hours of service” limits (as explained earlier under Individuals subject to “hours of service” limits in chapter 2), use 80% instead of 50% for meals while away from your tax home. Utahtaxhelp org Reimbursements. Utahtaxhelp org   Enter on Form 2106, line 7 (you cannot use Form 2106-EZ) the amounts your employer (or third party) reimbursed you that were not reported to you in box 1 of your Form W-2. Utahtaxhelp org This includes any amount reported under code L in box 12 of Form W-2. Utahtaxhelp org Allocating your reimbursement. Utahtaxhelp org   If you were reimbursed under an accountable plan and want to deduct excess expenses that were not reimbursed, you may have to allocate your reimbursement. Utahtaxhelp org This is necessary when your employer pays your reimbursement in the following manner: Pays you a single amount that covers meals and/or entertainment, as well as other business expenses, and Does not clearly identify how much is for deductible meals and/or entertainment. Utahtaxhelp org You must allocate that single payment so that you know how much to enter on Form 2106, line 7, Column A and Column B. Utahtaxhelp org Example. Utahtaxhelp org Rob's employer paid him an expense allowance of $12,000 this year under an accountable plan. Utahtaxhelp org The $12,000 payment consisted of $5,000 for airfare and $7,000 for meals, entertainment, and car expenses. Utahtaxhelp org The employer did not clearly show how much of the $7,000 was for the cost of deductible meals and entertainment. Utahtaxhelp org Rob actually spent $14,000 during the year ($5,500 for airfare, $4,500 for meals and entertainment, and $4,000 for car expenses). Utahtaxhelp org Since the airfare allowance was clearly identified, Rob knows that $5,000 of the payment goes in Column A, line 7, of Form 2106. Utahtaxhelp org To allocate the remaining $7,000, Rob uses the worksheet from the Instructions for Form 2106. Utahtaxhelp org His completed worksheet follows. Utahtaxhelp org Reimbursement Allocation Worksheet (Keep for your records)   1. Utahtaxhelp org Enter the total amount of reimbursements your employer gave you that were not reported to you in box 1 of Form W-2 $7,000   2. Utahtaxhelp org Enter the total amount of your expenses for the periods covered by this reimbursement 8,500   3. Utahtaxhelp org Of the amount on line 2, enter your total expense for meals and entertainment 4,500   4. Utahtaxhelp org Divide line 3 by line 2. Utahtaxhelp org Enter the result as a decimal (rounded to at least three places) . Utahtaxhelp org 529   5. Utahtaxhelp org Multiply line 1 by line 4. Utahtaxhelp org Enter the result here and in Column B, line 7 3,703   6. Utahtaxhelp org Subtract line 5 from line 1. Utahtaxhelp org Enter the result here and in Column A, line 7 $3,297 On line 7 of Form 2106, Rob enters $8,297 ($5,000 airfare and $3,297 of the $7,000) in Column A and $3,703 (of the $7,000) in Column B. Utahtaxhelp org After you complete the form. Utahtaxhelp org   After you have completed your Form 2106 or 2106-EZ, follow the directions on that form to deduct your expenses on the appropriate line of your tax return. Utahtaxhelp org For most taxpayers, this is line 21 of Schedule A (Form 1040). Utahtaxhelp org However, if you are a government official paid on a fee basis, a performing artist, an Armed Forces reservist, or a disabled employee with impairment-related work expenses, see Special Rules , later. Utahtaxhelp org Limits on employee business expenses. Utahtaxhelp org   Your employee business expenses may be subject to either of the limits described next. Utahtaxhelp org They are figured in the following order on the specified form. Utahtaxhelp org 1. Utahtaxhelp org Limit on meals and entertainment. Utahtaxhelp org   Certain meal and entertainment expenses are subject to a 50% limit. Utahtaxhelp org If you are an employee, you figure this limit on line 9 of Form 2106 or line 5 of Form 2106-EZ. Utahtaxhelp org (See 50% Limit in chapter 2. Utahtaxhelp org ) 2. Utahtaxhelp org Limit on miscellaneous itemized deductions. Utahtaxhelp org   If you are an employee, deduct your employee business expenses (as figured on Form 2106 or 2106-EZ) on line 21 of Schedule A (Form 1040). Utahtaxhelp org Most miscellaneous itemized deductions, including employee business expenses, are subject to a 2%-of-adjusted-gross-income limit. Utahtaxhelp org This limit is figured on line 26 of Schedule A (Form 1040). Utahtaxhelp org 3. Utahtaxhelp org Limit on total itemized deductions. Utahtaxhelp org   If your adjusted gross income (line 38 of Form 1040) is more than $300,000 ($150,000 if you are married filing separately), the total of certain itemized deductions, including employee business expenses, may be limited. Utahtaxhelp org See your form instructions for information on how to figure this limit. Utahtaxhelp org Special Rules This section discusses special rules that apply only to Armed Forces reservists, government officials who are paid on a fee basis, performing artists, and disabled employees with impairment-related work expenses. Utahtaxhelp org Armed Forces Reservists Traveling More Than 100 Miles From Home If you are a member of a reserve component of the Armed Forces of the United States and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct your travel expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. Utahtaxhelp org The amount of expenses you can deduct as an adjustment to gross income is limited to the regular federal per diem rate (for lodging, meals, and incidental expenses) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. Utahtaxhelp org See Per Diem and Car Allowances , earlier, for more information. Utahtaxhelp org Any expenses in excess of these amounts can be claimed only as a miscellaneous itemized deduction subject to the 2% limit. Utahtaxhelp org Member of a reserve component. Utahtaxhelp org   You are a member of a reserve component of the Armed Forces of the United States if you are in the Army, Navy, Marine Corps, Air Force, or Coast Guard Reserve; the Army National Guard of the United States; the Air National Guard of the United States; or the Reserve Corps of the Public Health Service. Utahtaxhelp org How to report. Utahtaxhelp org   If you have reserve-related travel that takes you more than 100 miles from home, you should first complete Form 2106 or Form 2106-EZ. Utahtaxhelp org Then include your expenses for reserve travel over 100 miles from home, up to the federal rate, from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. Utahtaxhelp org Subtract this amount from the total on Form 2106, line 10, or Form 2106-EZ, line 6, and deduct the balance as an itemized deduction on Schedule A (Form 1040), line 21. Utahtaxhelp org   You cannot deduct expenses of travel that does not take you more than 100 miles from home as an adjustment to gross income. Utahtaxhelp org Instead, you must complete Form 2106 or 2106-EZ and deduct those expenses as an itemized deduction on Schedule A (Form 1040), line 21. Utahtaxhelp org Officials Paid on a Fee Basis Certain fee-basis officials can claim their employee business expenses whether or not they itemize their other deductions on Schedule A (Form 1040). Utahtaxhelp org Fee-basis officials are persons who are employed by a state or local government and who are paid in whole or in part on a fee basis. Utahtaxhelp org They can deduct their business expenses in performing services in that job as an adjustment to gross income rather than as a miscellaneous itemized deduction. Utahtaxhelp org If you are a fee-basis official, include your employee business expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. Utahtaxhelp org Expenses of Certain Performing Artists If you are a performing artist, you may qualify to deduct your employee business expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. Utahtaxhelp org To qualify, you must meet all of the following requirements. Utahtaxhelp org During the tax year, you perform services in the performing arts as an employee for at least two employers. Utahtaxhelp org You receive at least $200 each from any two of these employers. Utahtaxhelp org Your related performing-arts business expenses are more than 10% of your gross income from the performance of those services. Utahtaxhelp org Your adjusted gross income is not more than $16,000 before deducting these business expenses. Utahtaxhelp org Special rules for married persons. Utahtaxhelp org   If you are married, you must file a joint return unless you lived apart from your spouse at all times during the tax year. Utahtaxhelp org If you file a joint return, you must figure requirements (1), (2), and (3) separately for both you and your spouse. Utahtaxhelp org However, requirement (4) applies to your and your spouse's combined adjusted gross income. Utahtaxhelp org Where to report. Utahtaxhelp org   If you meet all of the above requirements, you should first complete Form 2106 or 2106-EZ. Utahtaxhelp org Then you include your performing-arts-related expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. Utahtaxhelp org   If you do not meet all of the above requirements, you do not qualify to deduct your expenses as an adjustment to gross income. Utahtaxhelp org Instead, you must complete Form 2106 or 2106-EZ and deduct your employee business expenses as an itemized deduction on Schedule A (Form 1040), line 21. Utahtaxhelp org Impairment-Related Work Expenses of Disabled Employees If you are an employee with a physical or mental disability, your impairment-related work expenses are not subject to the 2%-of-adjusted-gross-income limit that applies to most other employee business expenses. Utahtaxhelp org After you complete Form 2106 or 2106-EZ, enter your impairment-related work expenses from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 28, and identify the type and amount of this expense on the dotted line next to line 28. Utahtaxhelp org Enter your employee business expenses that are unrelated to your disability from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 21. Utahtaxhelp org Impairment-related work expenses are your allowable expenses for attendant care at your workplace and other expenses in connection with your workplace that are necessary for you to be able to work. Utahtaxhelp org You are disabled if you have: A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working. Utahtaxhelp org You can deduct impairment-related expenses as business expenses if they are: Necessary for you to do your work satisfactorily, For goods and services not required or used, other than incidentally, in your personal activities, and Not specifically covered under other income tax laws. Utahtaxhelp org Example 1. Utahtaxhelp org You are blind. Utahtaxhelp org You must use a reader to do your work. Utahtaxhelp org You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. Utahtaxhelp org The reader's services are only for your work. Utahtaxhelp org You can deduct your expenses for the reader as business expenses. Utahtaxhelp org Example 2. Utahtaxhelp org You are deaf. Utahtaxhelp org You must use a sign language interpreter during meetings while you are at work. Utahtaxhelp org The interpreter's services are used only for your work. Utahtaxhelp org You can deduct your expenses for the interpreter as business expenses. Utahtaxhelp org Prev  Up  Next   Home   More Online Publications